China labor costs won't deter investors: official

By IBT Staff Reporter On 06/10/10 AT 4:16 AM

China's rising labor costs will not deter foreign investors because policies to boost domestic consumption provide a new reason for them to seek profits in the world's third-largest economy, a senior trade official said on Thursday.

Lu Kejian, head of the Asia department at the commerce ministry, said China still enjoys a competitive advantage over its neighbors, despite a series of recent strikes that has led investors to worry about rising wages in the world's largest exporting nation.

Even before the unrest, which has forced production halts at Honda Motor <7267.T>, sewing machine maker Brother Industries <6448.T> and other companies, many Chinese cities had already raised their minimum wages this year by as much as 20 percent.

But Lu told a news conference that he expected China to remain the top choice for investment and production sourcing for many foreign firms.

With the improvement in our policies and investment environment, the trend will not change, he said.

China's efforts to spur growth in its less-developed central and western regions as well as consumption subsidies in rural areas will help to ensure that the country remains a very attractive market for foreign firms, Lu added.

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